Panel won’t back hotel request for tax-relief deal in Worcester

Wednesday

Apr 10, 2013 at 6:00 AMApr 10, 2013 at 8:33 PM

By Nick Kotsopoulos TELEGRAM & GAZETTE STAFF

Plans for a 100-room Hampton Inn and Suites hotel north of Lincoln Square have run into trouble after the City Council Economic Development Committee Tuesday night unanimously turned down a proposed tax-relief deal to help finance the project.

While the three committee members said they fully understand the need for more hotel rooms in the city, they questioned the developer’s need for a seven-year tax-increment financing deal that would have generated an estimated property tax savings of slightly more than $1 million.

They also expressed disappointment over the fact that most of the 30 permanent full-time jobs that would be created by the $11.1 million hotel project would be low-paying jobs.

Councilor-at-Large Frederick C. Rushton said the hotel developers need to take a “severe haircut,” in reference to the amount of tax relief they are seeking from the city.

“TIFs do work in the right circumstances and I’m in full agreement about the need for more hotel rooms, but I’m not convinced about this project,” Mr. Rushton said. “It appears (the developer) is profiting from the sale of their own property, and they will be getting profits from construction and architectural services. I cannot vote for this; there has to be a severe haircut with this. I’m talking about a severe haircut.”

The hotel would be built on what is now part of the property for the Courtyard by Marriott at 72 Grove St., which is also owned by the hotel developer, SXC Prescott Street Hotel LLC.

Councilor-at-Large Joseph C. O’Brien pointed out that the developer of the new hotel would in essence be paying itself $1 million for a 39,277-square-foot parcel it already owns, bounded by Salisbury Street to the south and Prescott Street to the east.

He also said the developer would be making a profit on the construction and design of the hotel since it has its own construction management and architectural services companies.

As a result, Mr. O’Brien questioned the need for the TIF.

District 3 Councilor George J. Russell also questioned the need for a tax-relief deal when other hotels have been able to survive without them.

City Manager Michael V. O’Brien asked the panel to consider holding the issue in committee so he can provide further information. But the committee chose to vote the matter out.

Even though the Economic Development Committee voted 3-0 against recommending the TIF proposal to the entire council, the matter is not dead.

The proposal can still win approval if it receives a majority vote of the City Council.